Markets turn cautious as focus shifts to key US data
Here’s what you need to know on Thursday, May 26:
Markets seem to have turned cautious early Thursday ahead of key data releases from the US. The US dollar index is hovering in a relatively narrow range above 102.00 after Wednesday’s rebound and US stock index futures are down between 0.3% and 0.7% at the start of the European session. The US Bureau of Economic Analysis will release its second estimate of first-quarter GDP growth later in the session, and the US Labor Department will publish weekly initial jobless claims data. The change in April pending home sales will also appear in the US economic calendar.
The May Federal Reserve policy meeting minutes confirmed that the Fed is still on track to raise interest rates by 50 basis points in June and July. The post further revealed that many participants saw inflation risks skew to the upside and showed that a number of policy makers believed it would be appropriate to consider sales of mortgage-backed securities.
Meanwhile, the city of Beijing recorded 45 cases of the new coronavirus on Wednesday, down slightly from the 47 cases reported on Tuesday. On the positive side, ports in Shanghai are reported to be operating at 95% capacity. The Shanghai Composite closed for the second day in a row in positive territory, gaining more than 1% during that period.
New Zealand dollar / US dollar It lost steam after jumping to a new three-week high above 0.6500 on Wednesday. Reserve Bank of New Zealand Governor Adrian Orr acknowledged on Thursday that they cannot rule out a recession.
US dollar / Canadian dollar It is moving sideways above 1.2800 early Thursday. Later in the session, Statistics Canada is expected to report a 1.4% increase in retail sales in March after February’s 0.1% increase.
EUR / USD It remains relatively quiet below 1.0700 early Thursday. European Central Bank Governing Council member Klas Knott said on Wednesday that inflation expectations are well anchored at the upper end and that a 50 basis point rate hike in July was on the table. However, these comments failed to help the common currency regain strength. No major impact macroeconomic data will be featured in the European economic docket on Thursday.
British Pounds / US Dollars It posted small gains on Wednesday as buyers continued to defend the 1.2500 level. However, the pair remains in a weak position and is trading near 1.2550 on Thursday amid risk aversion.
US dollar / Japanese yen It is moving up and down in a narrow channel above 127.00. Japanese Prime Minister Fumio Kishida said earlier in the day that the Bank of Japan should make efforts to achieve the 2% inflation target “consistently and sustainably.”
He went It snapped a five-day winning streak on Wednesday and extended its slide early Thursday. XAU/USD was last seen trading at less than $1,850. The benchmark 10-year US Treasury yield is down nearly 1% on the day, helping the pair limit its losses for the time being.
Bitcoin It is still struggling to make a decisive move in either direction and remains below the key $30,000 handle. Ethereum It fell on the European morning and was last seen testing $1,900.